Amicus Briefs Filed In Appellate Court In Support Of Fannie Mae Plaintiffs by Todd Sullivan, ValuePlays
Below are Appellate Briefs filed either in support of plaintiffs or in support of maintaining Fannie Mae and Freddie Mac in the current form and eliminating their liquidation.
I’d expect more to come
60 Plus Association, Inc
Interest Of The Amicus Curiae
Amicus Curiae 60 Plus Association, Inc. (“60 Plus”) is a non-partisan seniors advocacy group with a free enterprise, limited government, lower taxes approach to seniors issues. It is dedicated to educating the public about policies that help Americans of retirement age preserve and pass along to their families and to their intended charities the product of their lifelong efforts. Founded in 1992, 60 Plus now has more than 7.2 million supporters nationwide. In its advocacy on issues affecting senior citizens, 60 Plus frequently addresses subjects covered by probate law. Among these subjects are the fiduciary duties that conservators owe to conservatees. Accordingly, amicus has a direct interest in the correct application of common law principles that govern conservators.
The district court decision in this case rests on a view of the fiduciary duties of conservators that is contrary to settled common law principles, that misperceives the essential duties of trust and loyalty at the core of the conservator-conservatee relationship, and that ultimately permits the very sort of conduct by a conservator that should be and is forbidden by the common law. Because of the profound misperceptions that inform the district court opinion, 60 Plus has a keen interest in assisting this Court to discern and remedy the errors in the decision below. Given its experience in dealing with these legal issues, 60 Plus is well-suited to address the common law probate antecedents of the terms, principles and concepts that are key to the correct resolution of this case.
Introduction And Summary Of Argument
When Congress authorized the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac (the “Companies”), to take action to put the Companies in a “sound and solvent condition” and to “preserve and conserve” the Companies’ assets, it employed a term that has a settled, accepted meaning under common law; and, therefore, intended for the FHFA’s scope of authority to fall within the boundaries of well-established principles of conservatorships in the probate context. At the heart of these well-established conservatorship principles are duties required of a conservator, specifically 1) the duty to preserve the conservatee’s autonomy; 2) the duty of loyalty to the conservatee; and 3) the duty to preserve and conserve the conservatee’s estate by acting prudently. These duties provide key protections to conservatees, whose fundamental rights to make certain decisions for themselves have been drastically reduced, albeit for their benefit. These duties together create a strict standard by which a conservator’s actions are evaluated and deemed either within the scope of the conservator’s authority or ultra vires.
The express language used by Congress in the Housing and Economic Recovery Act (“HERA”) applies these established common law duties to FHFA in its role as conservator for the Companies. But the district court validated an action taken by the FHFA that clearly violates a conservator’s common law duties. Specifically, the FHFA exceeded the scope of its authority and violated its common law duty by entering into the Third Amendment to the Senior Preferred Stock Purchase Agreements (the “Net Worth Sweep Amendment”) with the Department of the Treasury.
By entering into the Net Worth Sweep Amendment, the FHFA violated the following duties it owes to the Companies: 1) the duty to preserve the Companies’ autonomy by acting instead to wind down the Companies; 2) the duty of loyalty by benefiting a third party (Treasury) to the detriment of the Companies; and 3) the duty to prudently preserve and conserve the conservatee’s estate by transferring all the Companies’ profits to Treasury at a time when it was well aware that the Companies were gaining financial stability.
See full PDF below.